Missouri Utility Raises Rates to Offset Energy Efficiency Program

Kansas City Power & Light has been given the green light to charge customers for some of the costs associated with a new energy efficiency program. The Missouri Public Service Commission has approved KCP&L’s request to raise electricity rates slightly to cover its outlay of $40 million over three years for rebates and other energy efficiency incentives, according to The Kansas City Star. After three years, if it meets at least 70 percent of its conservation goal, the utility would be able to raise rates further to cover revenue lost from the reduced electricity use.

Areas affected by the rate increases include 300,000 customers in southeast Kansas City and the suburbs of Raytown and Lee’s Summit.

The energy efficiency program will begin in 2013, and KCP&L hopes to achieve $150 million in electricity savings in three years. The reduction in usage will eliminate the need for a small natural-gas-fueled power plant.

Utilities are caught in a catch-22 because if they offer rebates for energy efficiency, their business suffers from lost electricity sales. There’s no financial incentive for them to encourage conservation. The new arrangement will allow KCP&L to promote energy efficiency without damaging its own finances.

While KCP&L has plenty of capacity for the foreseeable future, some utilities don’t. They’re motivated to encourage energy efficiency because they’re concerned about meeting electricity demand in the future and don’t want to build new power plants. According to NW Public Radio, some utilities are finding creative ways to encourage efficiency with contests and social media messaging.

This is a very old debate that goes back nearly 3o years with major utilities and I am surprised and yet not with KCP&I. Utilities have charged a very small mil rate to recover cost for implimentation of programs. I should know I developed a lot of them.